The QR code payment system operated by KakaoPay is expanding rapidly. The service collects no payment fees from small business owners and young people who are not hesitant to use a QR code payment service are using it a lot. KakaoPay’s growing popularity suggests that the joint mobile direct payment service to be introduced by Korean banks next year will settle earlier than expected, as the two services are basically the same payment method.
KakaoPay said the number of applications for its QR code kits for small business owners has exceeded 80,000. It has only been two months since KakaoPay launched the off-line QR code payment service on May 28. The QR code kit includes a signboard that says "QR code payment shop," which will be placed at the checkout counter, and instructions on how to use it. Production and shipping costs are supported by KakaoPay.
The QR code kit is given only to those who join the service, so the number of applicants for the QR kit means the number of member stores. An official from KakaoPay said, "We originally expected 20,000 applications within the year, but the applicants surpassed four times the target in only two months. At this rate, we will be able to reach 200,000 within this year.”
The fast growth is thought to be due to the fact that member stores pay no commission fees appealed to sellers. Another factor was that younger people, who are familiar to using their smartphones, are not hesitant to scan QR codes and make payments.
KakaoPay is stepping up efforts to spread the QR code payment following the recent decision of the Seoul city government to launch “Zero Pay,” a simple payment platform intended to abolish the fees that small business owners have to pay for using settlement services. KakaoPay can succeed only when Zero Pay succeeds. Zero Pay is a structure that transfers money directly from a buyer’s account to a merchant’s account through the QR code provided by five payment platforms such as KakaoPay, Payco, Naver, T-money and BC Card.
KakaoPay plans to change the basic framework of payment market from card-oriented to QR code-oriented. KakaoPay is a subsidiary of Kakao, and Ant Financial, the parent company of the Chinese payment platform, Alipay, is its second largest shareholder. KakaoPay is planning to use the know-how of Ant Financial to establish a solid foothold in the domestic QR code payment market. It is not expected to earn profits immediately as it will not charge small business owners commission fees for using QR codes. Instead, the money received through QR codes can only be deposited to or withdrawn from accounts that are linked to KakaoPay. This will naturally increase the customer base.
A financial official said, "The recent move of KakaoPay reminds me of Kakao Bank that became a ‘catfish’ in the bank industry last year. At this rate, it is not unreasonable to forecast that QR codes will shake up the existing payment market."